ENERFISH

Integrated Renewable Energy Solutions for Seafood Processing Stations

Project number: 219008 Funding scheme: Collaborative projects
Start date: 2008.10.01 Duration: 36 months
Call identifier: FP7-ENERGY-2007-2-TREN

Deliverable 12
CDM Potential Study

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Written by VTT/Technofi 15.02.2011 Deliverable
Checked by All partners 15.03.2011
Validated by VTT 31.03.2011 Month 30
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 DOCUMENT CHANGE LOG
Revision Date Changes description

2
 COPYRIGHT
Copyright by the ENERFISH Consortium.
The ENERFISH Consortium consists of the following Partners:

Beneficiary Beneficiary organization name Beneficiary Country

Number short name
1 Technical Research Centre of Finland
VTT Finland
(coordinator)
2 Technische berwachungsverein Rheinland TV Germany
3 Technofi Technofi France
4 National Energy Foundation NEF Great Britain
6 Hiep Thanh Seafood Joint Stock Company HT-FOOD Vietnam
7 Preseco Preseco Finland
8 Vahterus Vahterus Finland
9 ECC ECC Vietnam
10 RCEE Energy and Environment JSC RCEE Vietnam
11 AF Industry JSC AFI Vietnam

This document may not be copied, reproduced, or modified in whole or in part for any purpose
without written permission from the ENERFISH Consortium. In addition to such written
permission to copy, reproduce, or modify this document in whole or part, an acknowledgement of
the authors of the document and all applicable portions of the copyright notice must be clearly
referenced.

All rights reserved.

3
Executive Summary
i) Biodiesel from fish-waste

If the biodiesel would be sold in the market and used to replace petrodiesel, the total annual income (including CREs
(small) and the sold biodiesel (large)) would accumulate to 4.1 4.4 million ., making the waste to biodiesel a good
investment . This implies no additionality and non-eligibility for CDM funding.

ii) Biogas from glycerol.

This type of project, biogas from wastewater sludge to electricity, is not common practice in Vietnam, and it would be
a considerably high investment generating a relatively small income.
Asian technology (eg ERDI/Thai) could be substantially less expensive, and thus the availability and costs of such
technology should be investigated in the further stages of project development, such as in a feasibility study.

Summary
i) Biodiesel from fish-waste

If the biodiesel would be sold in the market and used to replace petrodiesel, the emission reductions would be in the
order of 13 850 t CO2e/year, if an emission factor of 2.92 t CO2/t for petrodiesel is used. This would mean a CER
income of roughly 138 500 /year, and the total annual income (including the sold biodiesel) would accumulate to 4.1
4.4 million . This income is uncertain, because the market price and demand cannot be guaranteed in advance.
The Preseco biodiesel process used in the ENERFISH project generates higher quality biodiesel, and can be directly
applied to diesel engines. Two projects using the AM0047 methodology (biodiesel to be used in host country) are in
validation, situated in China and India. Neither one of the projects in validation involve biodiesel production from
fish waste oils/fats. This means that a fish waste biodiesel project implemented (in other seafood processing
facilities) could be first of its kind in the world, which is a good argument for additionality.
However, this sort of project is not additional because of its high commercial value, sothat it would be excluded
from CDM funding.

ii) Biogas from glycerol.

This type of project, biogas from wastewater sludge to electricity, is not common practice in Vietnam, and it would be
a considerably high investment generating a relatively small income.
Asian technology could be substantially less expensive, and thus the availability and costs of such technology should
be investigated in the further stages of project development, such as in a feasibility study. If the costs are assumed to
be 5.5 M (Finnish technology), and the annual electricity costs savings and CER income from the biogas plant
account to 161 170 , the payback period would be roughly 34 years (no discount factor applied). Without the CER
income the payback period is notably longer, about 65 years.
However, for instance The Chiang Mai based ERDI institute (Thailand) has designed numerous similar biogas plants
in Thailand, reducing the costs by a factor 5-6, (due to the design being made for tropical countries involving less
insulation) making the project (more) feasible.

4
Contents

Executive summary 4

Summary 4

1. Introduction: CDM 6

1.1 Introduction 6
1.2 The UNFCCC and The Kyoto Protocol 6
1.2.1 The UNFCCC 7
1.2.2 The Kyoto Protocol 7
1.2.3 Specificity of the allowances 11
1.2.4 CDM. mechanism and key figures 11
1.2.5 Spot and futures prices of CERs 15

2. Biodiesel from Fish waste at the Hiep Thanh seafood processing plant 19

2.1 Objectives and description of project activity 19

2.2 Additionality 22

3. Biogas from wastewater sludge at the Hiep Thanh seafood processing plant 25

3.1 Objectives and description of project activity 25

3.2 Additionality 27

4. Conclusions 29

5. References 29

5
1 Introduction CDM
1.1 Introduction
In 1989, the IPCC (Intergovernmental Panel on Climate Change) [1] was created after the
warnings sent by many specialists of the climate who suspected that massive anthropogenic
release in the atmosphere of gases such as carbon dioxide and methane could cause a rise in mean
temperatures and change our climate, i.e. result in global warming. The IPCC was set up, as an
independent body, by the World Meteorological Organization (WMO) and the United Nations
Environment Program (UNEP) in order to give to the international community a clear scientific
view on human-induced climate change. The mission of the IPCC was and is still today to "assess
the scientific, technical and socio-economic information that relates to human-induced climate
change". The most important documents published by the IPCC are the assessment reports. The
first assessment report (FAR) published in 1990 [1] provided a clear scientific evidence for
human-induced climate change and it played an important role in the creation of a common
political platform, the United Nations Framework Convention on Climate Change (UNFCCC) [2],
the key international treaty to reduce global warming and cope with the consequences of climate
change. It was signed during the 1992 Earth Summit in Rio de Janeiro by 166 countries. The IPCC
Second Assessment Report (SAR, 1995) [2] provided further knowledge which helped to set up
the Kyoto Protocol in 1997 during the third Conference of Parties (COP) of the UNFCCC. In this
protocol, some countries (industrialized countries) committed themselves to stabilize their
emissions of GHG1 (greenhouse gases) emissions in the atmosphere whereas in the UNFCCC they
were only encouraged to do so. The Kyoto protocol was considered as a political turn point with
important consequences on the economies of the participating countries since reducing emissions
implicitly meant to reduce industrial activities or to promote (invest in) energy efficiency and
clean (green) technologies for energy production, manufacturing, agriculture, etc.

1.2 - The UNFCCC and the Kyoto protocol

There are three families of tools which can be used to mitigate GHG emissions: regulations, taxes
and emission trading.

- Historically, regulatory tools have been used to ban CFCs 2 from all human-made products,
for example the Montreal protocol (depletion of the ozone layer) in 1987. CFC emissions
are inherent to few industrial activities, and therefore are easy to track; GHG emissions
have multiple and di use sources. Tracking GHG emissions would be too complex and
ine cient in economic terms.

- Tax-based tools were considered by the European Commission in 1992 before the EU-
ETS3 was in place. Due to tax harmonization problems, a consensus was never reached at
the EU level. Some European countries have however implemented this tool which proved
to be quite e cient. The main di culty with such measures is to nd the right taxation
level and therefore the right prices for GHG emissions without obvious market signals.

- The third tool is the creation of a market where the price of GHG emissions is set by a cap-
and-trade mechanism. This tool has already been used in the US for sulfur dioxide (SO2)

1
GHG: 6 gases according to the IPCC. These are: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O),
perfluorocarbons (CnF2n+2), hydrofluorocarbons (CnHmFp) and sulfur hexafluoride (SF6).
2
CFCs: chlorofluorocarbons.
3
EU-ETS: European emission trading scheme.
6
 mitigation (acid rains): in the nineties, power plants had emission caps and could
participate in trading mechanisms for compliance. This is the tool that has been chosen by
the international community in the UNFCCC and later on the Kyoto protocol.

1.2.1 - The UNFCCC

The United Nations Framework Convention on Climate Change, which entered into force on 21
March 1994, puts forward an international framework where parties agree to address the issue of
climate change and therefore enact e ective legislations (legal instruments) in order to mitigate
GHG emissions and bring back their concentrations to a level where anthropogenic activities do
not interfere with the climate system (article 2 of the convention). The parties (countries) are
sorted into three di erent groups (cf. Table 1) with di erent levels of commitment (articles 3 and
4).
- Annex I countries which are OECD4 countries plus CIS, where the CIS (Commonwealth of
Independent States) countries are referred to as EIT (economies in transition) that is the
former Soviet Union and all central and eastern European nations. These parties must
reduce their GHG emissions to the 1990 level (article 4.2b).

- Annex II countries (OECD only) have the obligations of Annex I countries. They must also
provide financial support to monitoring of GHG emissions (article 4.3) and technology
transfer (clean technologies, cf. article 4.5) to non-Annex I countries.

- Non-Annex I countries, which represent all developing countries, must cooperate in the
monitoring process by providing all assistance which is required.

Parties of the UNFCCC also agree to cooperate in research and systematic observation (article 5)
and in education, training and public awareness (article 6). The remaining articles (7 to 26) deal
with the governance issues (secretariat, bodies, financing, etc.). Agreements have been reached on
the methodologies for reviewing and reporting inventories of countries (an inventory means a data
base where, for each year, GHG emissions are reported by source for each GHG, a source being
any activity which releases GHG in the atmosphere), especially issues related to LULUCF5 and
sinks (a sink means any process or mechanism which removes GHGs from the atmosphere; it
should not be confused with a reservoir which is a component or a set of components of the
climate system which stores GHGs, the ocean for example for carbon dioxide).

Today, the membership of the UNFCCC is nearly universal, i.e. 192 countries have signed the
convention.

1.2.2 - The Kyoto protocol

The Kyoto Protocol which was adopted in 1997 and which came into force in 2005 defines all
means and targets to implement the UNFCCC. The Kyoto protocol binds the 38 most developed
nations, referred to as the Annex B countries, cf. Table 1, to a cap-and-trade system for the six
major GHGs with the target of reducing by 5.2% the overall emissions, based on the levels of
1990, in the commitment period 2008 to 2012 (article 3 of the protocol). The reduction targets are
unevenly distributed: each Annex B country has emissions quotas called AAs, i.e. assigned
amounts. The emissions of each country are estimated in metric tons of carbon dioxide equivalent

4
OECD: Organisation for Economic Cooperation and Development.
5
LULUCF : Land Use, Land-Use Change, and Forestry.
7
(MTCO2e or tCO2e)6. Each emitted MTCO2e corresponds to one carbon credit, i.e. an assigned
amount unit (AAU), which is the right to emit one metric ton. The total number of credits (AAs)
which corresponds to the Kyoto target for each country and for the 5 year period, AA 08-12, is
calculated as follows:

AA 08-12 = E90 x 5 x R,
where E90 represent the baseline year that is the GHG emissions in 1990 computed according to
article 3 (3.7 and 3.8) of the protocol. This quantity is close to the 1990 GHG emissions excluding
LULUCF. R sets the individual target. R and E90 are given in Table 1: R is, for example, 0.87 for
Austria and 1.08 for Australia which means that Austria has to reduce its GHG emissions by 13%
whereas Australia can increase them by 8% compared to the 1990 level. The EU agreed to an 8%
decrease but even though each EEC country is assigned a 0.92 coefficient, the EU has a burden
sharing agreement (BSA) where the targets are spread unevenly, see Table 1. The coefficient R
should be the BSA one for the EU 15 countries.

The choice of year 1990 as a reference year has had important consequences. For the EIT
countries, whose economies were much stronger at the beginning of the nineties than they are
now, this base-

Table 1. Annex I and II countries (UNFCCC) and Annex B countries with associated targets
(Kyoto protocol). BSA: burden sharing agreement of the EU. E90: emissions for base year (1990)
in MtCO2e. (a) Countries that are undergoing the process of transition to a market economy. (b)
Countries added to Annex I by amendment (decision 4/CP.3 adopted at COP 3). (c) The USA has
not ratified the Kyoto protocol. UK: United Kingdom of Great Britain and Northern Ireland, EEC:
European Economic Community. Note that the EU (called EEC at the time of signature of the
UNFCCC) signed collectively but member states also signed on their own account. Source: [2].

Annex I Annex II Annex B Target BSA E90

Australia Australia Australia 1.08 548.7
Austria Austria Austria 0.92 0.87 79
Belarus (a)
Belgium Belgium Belgium 0.92 0.925 145.7
Bulgaria (a) Bulgaria 0.92 132.6
Canada Canada Canada 0.94 594
Croatia (a,b) Croatia 0.95
Czech Republic (a,b) Czech Republic 0.92 194.2
Denmark Denmark Denmark 0.92 0.79 70
Estonia(a) Estonia 0.92 42.6
EEC EEC EC 0.92 4266
Finland Finland Finland 0.92 1 71
France France France 0.92 1 563.9
Germany Germany Germany 0.92 0.79 1232.4
Greece Greece Greece 0.92 1.25 107
Hungary (a) Hungary 0.94 115.4
Iceland Iceland Iceland 1.10 3.4
Ireland Ireland Ireland 0.92 1.13 55.6

6
tCO2e : for a specific GHG, called X, y tCO2e of X = y x GWP(X), y in tonnes, where GWP is the Global Warming
Power, cf. [1,2].
8
 Italy Italy Italy 0.92 0.935 516.8
Japan Japan Japan 0.94 1261.3
Latvia (a) Latvia 0.92 26
Liechtenstein (b) Liechtenstein 0.92 0.23
Lithuania (a) Lithuania 0.92 49.4
Luxembourg Luxembourg Luxembourg 0.92 0.72 13.2
Monaco (b) Monaco 0.92 0.11
Netherlands Netherlands Netherlands 0.92 0.94 213
New Zealand New Zealand New Zealand 1.00 61.9
Norway Norway Norway 1.01 49.6
Poland (a) Poland 0.94 563.4
Portugal Portugal Portugal 0.92 1.27 60.1
Romania (a) Romania 0.92 278.2
Russian Federation Russian 1.00 3323.4
(a)
Federation 0.92 72.1
Slovakia (a,b) Slovakia 0.92 20.4
Slovenia (a,b) Spain Slovenia 0.92 1.15 289.8
Spain Sweden Spain 0.92 1.04 72.2
Sweden Switzerland Sweden 0.92 52.7
Switzerland Switzerland
Turkey 1.00 920.8
Ukraine (a) UK Ukraine 0.92 0.875 780
UK USA UK 0.93 (c)
USA USA
-line year means a surplus of AAUs without any effort to mitigate GHGs emissions: this surplus is
referred to as "hot air". For some countries, like the Russian Federation, Ukraine or Belarus, it can
represent today more than 50% of their emission allowances. Figure 1 shows normalized GHG
emissions profiles for EITs (Russian Federation, Ukraine and Belarus) and USA, Canada, France
and the EU 15. The hot air issue is clearly seen in Figure 1 (left). It appears that it will be difficult
for countries like the USA and Canada to meet their Kyoto targets, Figure 1 (right). The financial
crisis and the economic recession should lead to a temporary decrease which should be enough for
the EU (the cap for each country in Figure 1 is not 1 but R: it is 0.92 for the EU which means that
the EU 15 is slightly short of carbon credits so far).

Figure 1: normalized GHGs emissions profiles (1990-2007). Left: normalized GHGs emissions
profiles for EIT (Russia, Ukraine, and Belarus). Right: normalized GHGs emissions for the USA,

9
Canada, France and the EU 15. The cap is represented by the value 1 multiplied by R since the
GHG emissions have been normalized with the 1990 values for each country. The data includes
LULUCF. Source: [2].

The Kyoto protocol entered into force in February 2005 after ratification of Russia in October
2004, which was and is still the largest source of hot air. The USA remains the only Annex B
country which has not ratified the protocol after Australia finally signed it in 2007 following a
change in government.

The tools at hand in the Kyoto Protocol for GHG emissions mitigation are market-based
(international emissions trading -IET-, cf. article 17) and project-based: clean development
mechanism (CDM, cf. article 12) and joint implementation (JI, cf. article 6) projects. These tools,
referred to as the flexibility mechanisms, can be used by companies, businesses, NGOs, etc., under
the authority and responsibility of the respective governments. The principles are as follows:

- CDM: clean development mechanism. It gives the possibility to developed countries

(Annex I) to invest in developing countries (non-Annex I) in projects where there are
emissions reductions (this is mainly achieved by investments in clean technologies, for
example in the energy sector) in comparison to a reference project. The gained carbon
credits are added to the account of the investing countries. The carbon credits gained are
called CERs (Certified Emission Reduction): 1 CER represents the reduction of 1 tCO2e7.

- AJI: activities implemented jointly, referred to as JI. It gives the possibility to developed
countries (Annex I) to invest in another developed country (Annex I) in projects where
there are emissions reductions compared to a reference project. The gained carbon credits
by the investing country are offset by a corresponding debit in the host country. The JI
mechanism generates consequently zero carbon credits at the Annex I level. The carbon
credits gained by the investing party are called ERUs (Emission Reduction Units): 1 ERU
represents the reduction of 1 tCO2e.

- IET (International Emissions Trading): under the current compliance period (2008-2012),
Annex B countries that emit less than their quotas can sell carbon credits to nations that
exceed their quotas. Transfers and acquisitions of the carbon units (AAUs) are tracked and
recorded through registry systems and an international transaction log ensures secure
transfer of emission reduction units between countries.

As we shall see in Section 1.2.3, the emission allowances generated by the flexible mechanisms
(AAUs, CERs, and ERUs) have different rights and obligations associated with them.

Keeping in mind the basics of the flexibility mechanisms which have just been presented, one can
explain why the USA has not ratified the protocol. The reasons of the USA to stay outside the
protocol are mainly twofold: firstly, the USA are reluctant to limit their economic growth (which
is at the moment directly related to GHG emissions) when countries like China and India which
have become main GHG emitters have no targets (since 2005, China has larger yearly GHG
emissions than the USA; this is not true however for the yearly emissions per capita). Secondly,
the hot air issue is considered by the USA as an issue which is still to be solved: if the US were to
adopt the protocol, the probable excess of emissions that they would have at the end of 2012

7
The CDM is efficient in countries with low carbon intensity of the economy, that is, where few GHG emissions are
needed to produce one unit of GDP.
10
would correspond to the Russian hot air. In addition, the Russian surplus is probably too big for
good market conditions, i.e. the market is long, that is the caps were probably too generous.

The above mentioned issues raise serious concerns about the future of the Kyoto protocol after the
first commitment period (end of 2012) since no agreement was reach at the last COP in
Copenhagen last year.

1.2.3 - Specificity of the allowances

The main specificity of the different products is their bankability. AAUs are bankable8. CERs and
ERUs are bankable in the limit of 2.5% of AA 08-12 at the end of the true-up period that is in 2015
when the accounting and verification of the first Kyoto commitment period has to be performed.

CERs and ERUs are fungible, which means that they are recognized by other trading schemes of
Annex B countries, the EU-ETS for example. CERs and ERUs could be used as a fungibility link
between the EU-ETS and other schemes (the Australian Carbon Pollution Reduction Scheme -
CPRS- for example) since both trading schemes should not recognize their respective trading units
(EUAs and AEUs)9. CERs and ERUs can be seen as the way to have an international price signal.
There is however a point to be made concerning this view: experts are reluctant to see CERs as a
good price signal since they are not based on a cap-and-trade system but rather on a baseline-and-
credit mechanism. AAUs are backed by a cap-and trade system which makes them a better
candidate to an international price signal. This is, however, not true in practice since CERs are
today traded almost all over the world and are de-facto recognized as the best fungibility link.

AAUs are usually traded between countries and this causes some rigidity in the market because of
liquidity issues. This means that the price of AAUs cannot be considered as a real market price. In
addition, one could argue on the prices of ``different'' AAUs: indeed Russian AAUs should be
priced differently from for example Japanese AAUs because they correspond to hot air for Russia
and voluntary measures to mitigate GHGs emissions for Japan. This issue has not been settled yet.
The fact that some countries like Canada and Japan refuse to buy AAUs from Russia makes the
AAUs a rather weak fungibility link.

1.2.4 - CDM: mechanisms and key figures

We recall that Annex B countries can invest in projects in developing countries where there are
emissions reductions. The gained CERs can be used by the investing countries for example to
comply with the Kyoto caps; they can also be used in cash to improve the profitability of the
projects. The CDM is built on three main principles: cost effectiveness, "mitigate locally and act
globally" and additionality.

- Cost effectiveness means that it is cheaper (in terms of investment) for a developed country
to mitigate in a developing country, since the carbon intensity of the hosts economy is
lower.

8
Bankability refers to the carry-over function of the allowance transfer mechanisms: carry-over means to transfer
a unit issued under a commitment period to the next commitment period, i.e. the carry-over of the Kyoto units after
2012. The AAUs can be carried over. CERs and ERUs can be carried over in the limit of 2.5% of AA 08 12. AAUs, CERs
and ERUs are therefore bankable.
9
EUA and AEU: European Union Allowance and Australian Emissions Unit, i.e. right to emit 1 tCO2e in the EU-ETS
(EUA) or in the CPRS (AEU).
11
 - "Mitigate locally and act globally" means that the climate change issue is global, i.e. the
release of 1 tCO2e in Vietnam has the same effect on the climate system as the emission of
1 tCO2e in Finland for example.

- The additionality principle is closely linked to the baseline-and-credit approach of the

CDM. A CDM project needs to generate more emission reductions than it would otherwise
have occurred (additionality), meaning that one has to compare the project to a reference
project which corresponds to a business as usual one (the baseline). If there is indeed a
reduction of emissions, the economics of the greenest project are boosted by an extra
source of funding (CERs are traded against cash which represent a credit; they can also be
used to meet the reduction targets). This baseline-and-credit scheme has a major drawback:
the need for a regulator that checks that the reference project is a real one and that the
claimed emission reductions are real. This considerably slows down the process and
increases the "political" risk.

Figure 2 display the key steps of a CDM project. The secretariat of the CDM is overseen by the
CDM executive board (CDM EB) which is a 10 person board. For each country, the projects must
be registered by the Designated National Authorities (DNA). The DNA is the official body of the
host country which checks that the projects are in line with the Kyoto framework. In order to carry
out all operational work, the CDM EB has accredited Designated Operational Entities (DOE). The
DOEs, which can be domestic or international organizations, are responsible for all activities
related to the approval of the projects (Bureau Veritas Certification Holding SAS, for example, is a
DOE). Once the project has been approved by the DNA, the DOE executes the validation and
registration processes. After implementation and monitoring, the DOE verifies the emissions
measurements and certifies the project. The CDM EB can then proceed with the issuance of the
CERs through a CDM registry.

The CERs arising from a CDM project are called primary CERs. In order to finance the project
development costs, these CERs are usually sold by the stakeholders of the project to third party
investors before issuance through Emission Reduction Purchase Agreements (EPRA), i.e. forward
contracts. The investors take the risk of default that is the failure of the time consuming validation
process and the issuance of the CERs. This is one of the reasons why these products are traded at a
discount in the market (compared to the spot price). When issued, the CERs can be traded in a
secondary market (they are called secondary CERs). These CERs do no longer contain any project
risk. They can be used by Annex B countries to comply with the Kyoto caps (in this case they end
up in the national registries of the countries).

There are today over 4200 projects in the CDM queue of which 1873 are registered and 109 are
requested registration. The expected number of CERs represents more than 2.9 GtCO2e: the
registered projects so far should account for 1.67 GtCO2e whereas the ones requesting registration
should represent 40 MtCO2e. Today, the total number of issued CERs by host countries is
approximately 340 millions, that is 340 MtCO2e whereas the total number of CERs that were
requested is roughly 356 MtCO2e. The 2.9 GtCO2e of CERs which should be issued in the first
commitment period added to the already estimated 7.9 GtCO2e surplus of the Annex B countries
make the market roughly 11 GtCO2e long, for a market which should be around 60 GtCO2e.

12
 DNAs
Annex B
Non-annex I DOE 1** DOE 2**

Project Approvals Validation Registration Implementation Verification Certification

and monitoring

Investor (annex B) CDM EB

Project host (non-annex I)

CDM Registry (CERs)*

Figure 2: the CDM project cycle. (*): 2% of CERs are kept by the CDM EB as a fee. (**): the validation and registration must be carried out by two
different DOEs.

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ENERFISH
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Figure 3: number of CDM projects by host (top). Middle: number of CDM projects by investor.
Bottom: expected average of CERs per year in the first commitment period by host country.
Source: UNFCCC [2].

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ENERFISH
Deliverable D12

Figure 3 displays the number of CDM projects by host and investor. It can be seen, as expected,
that China and India represent 60% of the CDM projects by host. Surprisingly, Japan and Canada,
the two Annex B countries with the largest potential shortfall of AAUs are not the main investors.
This is not reflected in this chart (primary CERs) because CERs can be purchased on the
secondary market. Vietnam is hosting a significant number of projects, especially in terms of the
amount of issued CERs per project.

Overall, 60% of the projects are in the energy sector, 18% in the waste handling and disposal
sectors. Manufacturing industries and agriculture represent approximately 5% each. China
represents 50% of the CERs.

1.2.5 Spot and futures prices of CERs

Table 2 puts forward the volumes and the values of carbon markets in 2007 and 2008. The markets
are divided into three main categories: project based transactions, secondary CDM and allowances
markets. The data shows that the EU-ETS is by far the main market in terms of value and volume
(64% in volume and 73% in value of the total in 2008). The CDM markets (both primary and
secondary CERs) complete the picture (30% in volume and 26% in value of the total in 2008), the
other markets are marginal (6% in volume and 1% in value of the total in 2008).
Climate exchanges have been established to provide a spot market in allowances, as well as
futures markets to help discover a market price and maintain liquidity. Carbon prices are normally
quoted in Euros per ton of carbon dioxide or its equivalent (tCO2e). There are currently several
exchanges trading in carbon allowances in the EU (spot and futures markets), the main ones being
BlueNext in France [4] for spot products and the European Climate Exchange (ECX) in London
[5] for derivatives, i.e. futures. Market players are private companies eligible to the EU-ETS as
well as brokers, speculators and market makers. The spot markets give the possibility for eligible
companies to buy emission allowances (mainly EUAs and CERs) in case of under-coverage and to
sell emission allowances in case of surplus quantities in order to comply with the allocation
obligations and to optimize their production processes. The futures on EUAs and CERs
(derivatives market) permit price hedging for emission allowances and enable to implement
efficient CO2 risk management and to ensure planning capability regarding the costs of EUAs and
CERs.

Table 3: volumes (MtCO2e) and values (MUSD: millions of US dollars) of carbon markets in 2007
and 2008. Source: [3].
Year -> 2007 2008
Market volume value volume value
Project-based transactions
Primary CDM 552 7 433 389 6 519
JI 41 499 20 294
Voluntary market 49 263 54 397
Sub-total 636 8 195 463 7 210

Secondary CDM
Sub-total 240 5 451 1 072 26 277
Allowances Markets
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EU-ETS 2 060 49 065 3 093 91 910

New South Wales (Australia) 25 224 31 183
Chicago Climate Exchange 23 72 69 309
(US) - - 65 246
RGGI (US) - - 18 211
AAUs
Sub-total 2 108 49 361 3 276 92 859
Total 2 984 63 007 4 811 126 345

There are two main CER products traded in the EU-ETS: BlueNext Spot CER (BNS CER),
launched August 2008, which is a spot contract for CERs and ICE ECX Futures CER (ECX
Futures Dec yy) which is a derivative with delivery in December each year. The price tick is 0.01
euro per ton and the volume tick is 1000 tons.

Figure 3 displays the spot prices for EUAs and CERs (BNS EUA 08-12 and BNS CER). It shows
that CERs trade lower than EUAs. There are several reasons for that. In the case of primary CERs,
the discount is a direct consequence of the risk of the CERs not making the CDM approval process
and not being issued. In the present case, i.e. secondary CERs for which delivery is guaranteed by
the seller, the discount is due to the trading limits (the CERs are not bankable in the same terms as
the EUAs, cf. the 2.5% limit after 2012). One might argue that this will not always be the case
since CERs are a fungibility link: as more trading schemes become available around the world,
CERs might gain in value since there are today the only trading unit which is or shall be
recognized by the coming exchanges.

Figure 3: spot price for BNS EUA and BNS CER in Euros/tCO2e. Source: [4].

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Figure 4: price for ECX Futures (EUAs and CERs) in euros/tCO$_2$e. Source: [5].

Figure 3 shows that the carbon price dropped during fall 2008 from 20-25 to 8 euros/tCO2e and
has stayed since then in a 10 to 15-Euro interval. The 2008 fall decrease was due to the
consequences of the financial crisis: the economic recession which followed the financial crisis
lowered the demand in allowances whereas the offer stayed the same. The demand stayed quite
high for energy producers (electricity) but not for industries which had to cut their productions.
According to economists, the right price of emission allowances should be 15 to 20 euros and
there is no clear explanation why it has been so low up to now [6]. A possible explanation is the
credit crunch: many industries which cannot find cash on the market to finance their activities
resort to the carbon markets. This short term strategy is possible due to the EU-ETS calendar, that
is, companies can get in February their allowances for the coming year before compliance for the
former year in April. A company can borrow up to one year of allowances and cash them in the
market (up to 2012). This type of behavior has increased the offer and consequently the spot prices
both for EUAs and CERs have decreased.
Figure 4 puts forward the price trajectories for the ECX Futures (EUA and CER) which matured
December 2008. As in the case of the spot products, the EUA-based futures traded higher than the
CER-based ones for the same reasons that were exposed earlier. The spread between the prices of
EUAs and CERs called for arbitrage. One could sell EUAs and buy CERs for compliance in 2008,
and pocket the difference. Many large market players (installations, etc.) that could trade futures in
large quantities took advantage of this price differential. In spring 2008, they could sell EUA
Futures and buy CER Futures and pocket a 9 euros/tCO2e difference, and still be able to comply
by 30th April 2009, cf. Figure 5. By the end of December 2008, just before delivery, these market
players had arbitraged away most of the EUA/CER price differential (the price differential was
then between 1 and 2 Euros/tCO2e).

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Figure 5: EUA/CER price differential for spot and futures (Dec 08) contracts in Euros/tCO2e.
Source: [4 and 5].

As a matter of fact, small market players who could not trade large quantities of futures could have
resorted to the spot market. This did not happen: due to the late connection of the ITL and the
CITL10 in October 2008, CERs and some EUAs could not be delivered in time.

The price differential between EUA-based products and CER-based products should change in the
near future as more exchange go live, CERs being today the main fungibility link. The differential
should vary depending on the compliance calendars of the other trading schemes. It should reach a
maximum value during the 2012-2015 time period. At the end of 2015, only few CERs in each
EU-ETS national registry will be bankable; this should lower their value.

2. Biodiesel from Fish waste at the Hiep Thanh seafood

processing plant

2.1 Objectives and description of project activity

The Hiep Thanh Seafood Joint Stock Company operates a large fish processing facility by the Hau
Giang River, which is a distributary to the Mekong River, in southern Vietnam. The facility
produces mainly pangasius (Pangasius hypophthalmus) fillets for export. The company also owns
a 70 ha pangasius raising farm on the other side of the river, where the fish are raised before they
are processed in the plant, and a fish food factory. An energy audit was done at the Hiep Thanh
Seafood Joint Stock Company by Pyry Energy Oy accompanied by VTT Technical Research
Centre of Finland and Motiva Oy in October 2008. The underlying project idea note (PIN) is based
on the energy audit calculations in the audit report and further data gathered during the
ENERFISH project.
The monthly average input of fresh pangasius in the fish processing plant is 3 360 tonnes, which
generates an average output of 1 008 tonnes of frozen fillets. The annual production of fillets is

10
The ITL and CITL are the transaction logs of the Kyoto protocol and the EU-ETS respectively.
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approximately 12 100 tonnes (production in 2007). Monthly about 2 352 tonnes, which is nearly
70 %, of the fresh pangasius processed in the plant ends up as waste, when the fillets are removed.
The annual amount of fish waste is about 28 470 tonnes.
Currently the fish waste is sold in the market. However, in the energy audit it was noticed, that it
would be possible to produce biodiesel from the fish waste. The fish waste contains significant
amounts of animal fats (fat content of pangasius is 22 %), which make a good source for diesel
making purposes.
The biodiesel could be used in the seafood processing plant to make electricity at the spot (in a
diesel engine/generator) or sold in the market where it would replace petrodiesel.
As the biodiesel production at Hiep Thanh Seafood is part of the ENERFISH project, the project
idea presented in this PIN is just for information purposes. This information could be used in
similar seafood plants in other parts of Vietnam or other countries. Furthermore the possibility of
programmatic CDM (if possible after 2012) should be considered at that stage.

The objective of this project activity is to produce biodiesel from fatty fish waste at the Hiep
Thanh seafood processing plant. The biodiesel process involves fish oil separation from the waste,
and esterification of the oil to separate biodiesel and glycerol into two layers (see more detailed
process description in ENERFISH Deliverable D3). From the 28 470 tonnes of fish waste
annually generated at the plant, an estimated 4 745 tonnes of biodiesel could be produced. The
daily amount of fish oil separated from the waste would be 17 tonnes, of which 13 tonnes of
biodiesel could be produced. The biodiesel could be used to make electricity, or sold to the market
to replace petrodiesel in other types of diesel engines. One ton of biodiesel would generate an
estimated 4 MWhel of electricity, so the annual potential of electricity would be 18 980 MWhel.
In the ENERFISH project it has been planned, that a diesel engine with a capacity of 1.1 MWel
would be connected to the biodiesel process, so that the electricity currently used in the plant could
be self-produced. The seafood processing plant uses around 16 980 MWh of electricity annually
(estimated use in 2008), so the potential generation of 18 980 MWhel would be enough for the
electricity needs of the seafood plant, and the remaining electricity could be fed to the net or used
otherwise.

The price for electricity is approximately 42.7 /MWh (2009 average price), so the potential
generation of electricity would create an income of 810 446 per year. If the electricity produced
from biodiesel would be used to replace electricity purchased from the grid, the emission
reductions would be in the order of 11 830 t CO2e/year, if a grid emission factor of 0.623304 is
used. This would mean a CER income of roughly 118 300 annually, assuming a price of 10 per
CER. The total annual income would therefore be 928 746 .

However, alternatively the biodiesel could be sold to the Vietnamese market for a price of 800 -
900 /ton.
The CDM methodology ACM0017 (replaced AM0047) on the production of biodiesel for use as
fuel [7] stipulates the following:

i)Biodiesel Plant and Products:

a) The petrodiesel, the biodiesel and the blended biodiesel comply with national regulations (if
existent) or with suitable international standards such as ASTM D6751, EN14214, or ANP42.
ENERFISH guarantees standard EN14214;

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Deliverable D12

b) The project activity involves construction and operation of a biodiesel production plant.
ENERFISH does this.
c) The by-product glycerol is not disposed of or left to decay. It should be either incinerated or
used as raw material for industrial consumption. ENERFISH Deliverable D2 gave an overview
of possible applications of the by-product glycerol. For smaller scale glycerol production, the
concept of co-fermenting crude glycerol with waste water sludge, biodiesel soap water and
other locally available organic waste streams is a sustainable concept combining both glycerol
utilisation and local waste management to produce local fuel (biogas). This possibility will be
the subject of paragraph 3 below.
d) If biomass or biofuels are used at the site of the biodiesel production plant or the oil
production plant(s) for fuel combustion (e.g. for heat or electricity generation), then at least
95% of the biomass and biofuel used in these plants should be either biomass residues from the
dedicated plantations established under the project activity or biodiesel generated in the project
activity biodiesel production plant. The amount of biodiesel used should not be included in the
quantity of biodiesel for which emission reductions are claimed. ENERFISH fulfills this
demand.

ii)Consumption of biodiesel:
(a) The (blended) biodiesel is supplied to consumers within the host country who use the
(blended) biodiesel for fuel combustion in existing stationary installations (e.g. diesel
generators) and/or in vehicles;
(b) The consumer and the producer of the (blended) biodiesel are bound by a contract that
allows the producer to monitor the consumption of (blended) biodiesel and that states that
the consumer shall not claim CERs resulting from its consumption;
(c) No modifications in the consumer stationary installations or in the vehicles engines are
necessary to consume/combust the (blended) biodiesel. In case of stationary installations,
biodiesel or blended biodiesel with any blending fraction between 0 and 100% can be used.
In case of vehicles, only blended biodiesel can be used and the blending proportion must be
low enough to ensure that the technical performance characteristics of the blended
biodiesel do not differ significantly from those of petrodiesel. This condition is assumed to
be met if the blending proportion is up to 20% by volume (B20).11 If the project
participants use a blending proportion of more than 20%, they shall demonstrate in the
CDM-PDD that the technical performance characteristics of the blended biodiesel do not
differ significantly from those of petrodiesel and comply with all local regulations.
Blending is done by the producer, the consumer or a third party who is contractually bound
to the producer to ensure that blending proportions and amounts are monitored and meet all
regulatory requirements;
(d) In case of vehicles, the consumer (end-user) of the blended biodiesel is a captive fleet of
vehicles;

11
2004 Biodiesel Handling and Use Guidelines, U.S. Department of Energy.
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Deliverable D12

(e) Only biodiesel consumed in excess of mandatory regulations is eligible for the purpose of
the project activity. 12
So assuming these CDM conditions regarding consumption will be fulfilled, selling the biodiesel
to the market would generate a total annual income of 3.98 4.27 million , if there would be
demand for the biodiesel for a price of 800 900 /t.
It can thus be concluded, based on the annual income potential, that the option of selling the
biodiesel to the market would be more profitable than producing electricity for own use.
The market demand for fish based biodiesel is however not known at the PIN development stage.
If the biodiesel would be sold in the market and used to replace petrodiesel, the emission
reductions would be in the order of 13 850 t CO2e/year, if an emission factor of 2.92 t CO2/t for
petrodiesel is used. This would mean a CER income of roughly 138 500 /year, and the total
annual income would accumulate to 4.1 4.4 million . This income is more uncertain, because
the market price and demand cannot be guaranteed in advance.
The baseline scenario is that the fish waste is continued to be sold to the market, as it is has been
the most economical option for Hiep Thanh in the current circumstances.
In ENERFISH Deliverable D1 this baseline scenario resulted in the parametrization of the
electricity/CHP versus biodiesel option as depicted in Figure 7 and 8 below:

Figure 7 Profit and CHP Biodiesel consumption (regular electricity price)

12
Regulations that have been implemented since the adoption by the COP of the CDM M&P (decision 17/CP.7, 11
November 2001) need not be taken into account.
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Figure 8 As figure 7 (50% electricity tariff price)

The figures are based on some more conservative estimates than the above (biodiesel 650
Euros/t), but still the figures show a remarkable profit of 1.5 Million euros year (base case
Figure 7) as compared to the business as usual scenario (dotted line). Assuming a price of
400.000,- Euro as investment value for the biodiesel plant, it is clear that the investment has a
pay-back period of less than one year.

2.2 Additionality

In assessing the possibility to realize a project as ENERFISH as a CDM project, the concept of
additionality must be addressed.

The additionality requirement is important because the CDM is an offsetting mechanism. This
means that emission reductions achieved through CDM projects in developing countries permit
industrialized countries to emit more greenhouse gases than stipulated in their assigned Kyoto
targets. If a project that would also be implemented without the incentive provided by the Certified
Emission Reduction Units (CERs) is registered as a CDM project, the use of the CERs results in
an increase of global GHG emissions: the CERs enable industrialized countries to increase their
GHG emissions above their assigned Kyoto target, whereas the emission reductions in the
developing country would occur anyway.
The current guidelines on demonstrating additionality of small-scale projects (<60kton CO2 /year)
are very short and vague. They do not explicitly require that credible alternatives be identified, that
barriers be credible, and that documentation be provided for the existence of the barrier. The CDM
Executive Board should revise the guidelines and clarify what documentation needs to be provided
[8].
The Preseco biodiesel process used in the ENERFISH project generates high quality biodiesel,
and can be directly applied to diesel engines. There are currently no registered biodiesel projects
in the world . However, two projects using the AM0047/ACM001 methodology are in validation,
situated in China and India (checked 1.2.2011 at cdm.pipeline.org). Neither one of the projects in
validation involve biodiesel production from fish waste oils/fats. This means that a fish waste
biodiesel project implemented in another seafood processing facility could be first of its kind in
the world, which is a good argument for additionality.
However, since the ENERFISH project is not situated in an LDC/SID and moreover does not
deliver distributed electricity to households, the overriding argument against additionality is the

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Deliverable D12

profitability of the project. With or without CER income any project like ENERFISH would be
undertaken.
Another argument against additionality is the common practice argument as indicated below.

The Mekong Delta is an important area for fish farming and processing and therefore large
quantities of fish waste are produced as well.

Agifish (http://www.agifish.com.vn/home_en/modules/news/) is one of the Vietnamese catfish

producers. The company has agreed to set up a joint venture with Saigon Petro in order to
establish large-scale production facilities of biofuel from catfish gut. Two local refrigeration firms
are involved in the project as well. The production capacity of the plant is planned to be 30 000
tonnes of fuel a year and it would be located in An Giang province. A feasibility study is being
prepared and negotiations on investments are underway. Possible plant-sites are still being
evaluated as well. The processing equipment is planned to be imported. Converting fish waste to
valuable fuel could generate major opportunities for rural communities by providing income as
well as securing energy supply. However, according to Agifish representative, Vietnamese
biodiesel producers have not yet received any state funding for biodiesel production (Piccolo
2008; Vietnam News 2008 in Deliverable D2).

Minh Tu Ltd Co. is another Vietnamese company that plans producing fish oil based biodiesel. In
2006, the company successfully investigated the possibilities to manufacture biodiesel. The
company has invested in building a facility and partners with domestic companies as well as a
Cambodian company. It is estimated, that the facility could produce as much as 2 million litres of
biodiesel a year. The company affirms that 50/50 blends of biodiesel and mineral diesel would be
feasible. Minh Tu Ltd Co. purchases its raw material through local agencies and the company has
a stable supply of 50 tonnes of catfish fat a day. The price of catfish fat has recently risen steeply
which presents a challenge to biodiesel industry. This is due to the fact that local enterprises are
exporting large volumes of catfish fat. Therefore, Minh Tu Ltd co. is considering the use of
jatropha oil for the production of biodiesel (Vietnam News 2008 in Deliverable D2) .

According to Vietnamese biodiesel producers, there are some tedious procedures and legal
limitations for biodiesel which hinder the use of biodiesel. Yet, there are no clear national
requirements on biodiesel quality. However, a draft of biodiesel quality standard has been
prepared. (Vietnam News 2008 in Deliverable D2)

23

A Project summary
Key information
Project title
Project type and category
Project proponent
Contact person
Host Country
Targeted greenhouse gases
Estimated crediting period
Estimated emission
reductions
B Greenhouse gas emission reductions
Information on emission reductions
Indicative CER price
Estimated CERs over
crediting period and by 2012
Applicable baseline and
monitoring methodology
24(29)
ENERFISH
Deliverable D12
Biodiesel from fish waste at the Hiep Thanh seafood processing plant
small scale CDM
Hiep Thanh Seafood Joint Stock Company
Mr. Nguyen Thanh Danh
Socialist Republic of Vietnam
CO2
2011-2020 (10 years without renewal)
Total by 2012: 17 745 20 775 tCO2e
(expected CER generation start July
Annual average: 11 830 to 13 850 tCO2e/year
2011)
(estimates depending on biodiesel end use)
Total by 2020: 112 385 131 575 tCO2e
Total value: 177 450 207 750 EUR (by 2012)
Unit price: 10 EUR/tCO2e T T Total value: 1 123 850 1 315 750 EUR (by
2020)
Total: 112 385 131 575 tCO2e From: 2011 to: 2020 (i.e. 10 years)
Total by 2012:
Annual average: 11 830 - 13 850 tCO2e/year
17 745 20 775 tCO2e
ACM0017: Production of biodiesel for use as fuel
Additionality questionable
24
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Deliverable D12

3. Biogas from wastewater sludge at the Hiep Thanh seafood processing

plant

3.1 Objectives and description of project activity

As mentioned in section 2.3 for smaller scale glycerol production, the concept of co-fermenting
crude glycerol with waste water sludge, biodiesel soap water and other locally available organic
waste streams is a sustainable concept combining both glycerol utilisation and local waste
management to produce local fuel (biogas).

Thus the baseline scenario has to be more accurately defined in the possible detailed project
development stages, but here it is assumed that in the absence of the project activity the
wastewater sludge, glycerol and biodiesel process wastes are treated in anaerobic conditions where
they would generate methane emissions to the atmosphere. In the baseline situation all the
electricity consumed in the seafood processing plant would be bought from the grid, and thus
produced by mainly fossil fuels.

In the energy audit it was discovered that the seafood processing plant uses a significant amount of
water in the fish filleting process; water consumption in the plant was 360 000 m in 2007, of
which 324 000 m ended up as wastewater. The daily amount of waste water generated by the
plant is currently approximately 900 m, and the daily amount is going to be at least 50 m greater
when fish waste biodiesel production is also implemented at the plant.
The wastewater characteristics (before treatment) are as follows:

Table 4. Waste water characteristics before treatment

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Deliverable D12

The waste water is currently treated in a wastewater treatment facility connected to the plant (with
a capacity of 1 000 m/d) before it is led to the Hau Giang River. The wastewater treatment for the
seafood processing plant consists of two systems: in the first system the wastewater is aerated with
compressed air, and in the second one the floating and sinking particles are separated before the
water is led to the river. The biodiesel plant (implemented by the ENERFISH project) also
produces wastewater and crude glycerol, which are not treated in the wastewater treatment facility,
but directed to the biogas plant .
The wastewater treatment for the seafood processing plant consumes approximately 441 MWh
and the proposed biogas plant 240 MWh of electricity annually. The total energy consumption of
the plant is currently around 16,7 GWh/a (without the biodiesel and biogas plants).

The objective of the project activity proposed is to reduce methane emissions and generate
electricity by recovering biogas from the sludge generated in the wastewater treatment facility and
the waste water, protein and glycerol generated in the biodiesel production. The Finnish company
Preseco has designed the specifications for the biogas plant for the VietAudit 2 project (see
Vietaudit final report).

Preseco has calculated that the biogas process would consume 240 MWh of electricity, 2 654 m
of fresh water and 4 tonnes of chemicals per year. There would be a total wastewater sludge input
of 25 891 tonnes per year to the biogas process.
Of the total input the waste water from the biodiesel unit and oil separation would make about 82
%, fish protein about 14 %, glycerol about 3 % and the wastewater sludge from the treatment plant
only about 0.06 %.
The biodiesel project by ENERFISH is therefore a key component in the implementation of the
biogas project. The total input of 25 891 t/a would generate 103 Nm of biogas per hour. The
methane content of the biogas is expected to be 65 %. This means that a total of 66.95 Nm/h of
methane would be generated from the wastewater sludge and other input.
In one year the amount would be 586 482 Nm, which corresponds to 384.7 t CH4, if a methane
density of 0.656 kg/m (methane density at 25 C, close to annual average temperature in Vietnam)
is applied.
According to the CDM methology a Methane Correction Factor (MCF) shall be used to determine
a more realistic amount of methane released to the atmosphere by the way the sludge is treated in
the absence of the biogas project. It is assumed in this PIN (not enough information currently
available) that the sludge is treated in an anaerobic digester for sludge without methane recovery,
which has an IPCC default MCF factor of 0.8. This means that in the absence of the project, the
amount of methane that would be released annually to the atmosphere is approximately 307.76 t
CH4. Methane has a global warming potential of 21, which means that it is a 21 times more potent
greenhouse gas than carbon dioxide. The methane emissions avoided by the proposed biogas
project would be equivalent to 6 463 t CO2e/year.

The electricity generated from biogas is renewable, and reduces greenhouse gas emissions,
because it replaces energy purchased from the grid. Generating own electricity also reduces
electricity costs, because less electricity needs to be bought from the grid. The average price for
grid electricity is 42.6 /MWh (2009 average price), so generating 1 977 MWh of electricity
annually by biogas, 84 220 /year can be saved from the electricity purchase costs. Grid electricity
in Vietnam grid emission factor is expected to be 0.623304 t CO2e per MWh of electricity.
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Calculating with this emission factor (taken from recent Vietnamese PDDs) the potential
electricity generation of 1 977 MWh/a would reduce carbon dioxide emissions by 1 232 tonnes per
year.

Combining the emission reductions of the methane avoidance and electricity generation, a total of
circa 7 695 t CO2e/year can be reduced. Assuming a CER price of 10 , this would mean an
income of 76 950 per year. The CER amount is quite roughly calculated (and the CER price
uncertain) at this stage, and would need to be calculated in more detail in the possible PDD
development stage.
Investment costs for the biogas plant are expected to amount to 5-6 million , if Finnish
technology is used. Asian technology could be substantially less expensive, and thus the
availability and costs of such technology should be investigated in the further stages of project
development, such as in a feasibility study.
If the costs are assumed to be 5.5 M (Finnish technology), and the annual electricity costs savings
and CER income from the biogas plant account to 161 170 , the payback period would be
roughly 34 years (no discount factor applied). Without the CER income the payback period is
notably longer, about 65 years. If the total CER revenue potential up to 2020 is 731 020 , it
means that around 13 % of the investment could be covered with the CER revenues. According to
these calculations, the investment seems quite expensive in comparison to the income it would
generate; hence the costs and benefits of the biogas plant would have to be analyzed very carefully
before making any investment decisions.

3.2 additionality

The type of the project proposed here has not been done before in Vietnam, so there would be
several barriers to the implementation of the project.
There are several wastewater sludge biogas CDM projects in the registration process in Vietnam
(conditionally registered if corrections are made), and in the validation process, but none of them
uses wastewater sludge from animal waste as the source of biogas. All of the proposed biogas
CDM projects in Vietnam are based on starch production and generate thermal energy instead of
electricity. There are no registered CDM projects yet using the methodologies AMS-III.H and
AMS-I.D together, which means generating electricity from wastewater sludge biogas.
Three such projects (located in China, Thailand and Indonesia) are currently in the validation
process, and one Chinese project is placed under review by the CDM Executive Board because of
insufficient justification of the benchmark used in its benchmark analysis.

This type of project, biogas from wastewater sludge to electricity, is not common practice in
Vietnam, and it would be a considerably high investment generating a relatively small income.
Therefore this project is not feasible at this moment.

27

A Project summary
Key information
Project title
Project type and category
Project proponent
Contact person
Host Country
Targeted greenhouse gases
Estimated crediting period
Estimated emission
reductions
B Greenhouse gas emission reductions
Information on emission reductions
Indicative CER price
Estimated CERs over
crediting period and by 2012
Applicable baseline and
monitoring methodology
28(29)
ENERFISH
Deliverable D12
Biogas from wastewater sludge at the Hiep Thanh seafood processing plant
CDM
Hiep Thanh Seafood Joint Stock Company
Mr. Nguyen Thanh Danh
Socialist Republic of Vietnam
CH4, CO2
2011-2020 (10 years without renewal)
Total by 2012: 11 542 tCO2e
(expected CER generation start July
Annual average: 7 695 tCO2e/year
2011)
Total by 2020: 73 102 tCO2e
Total value: 115 420 EUR (by 2012)
Unit price: 10 EUR/tCO2e
Total value: 731 020 EUR (by 2020)
Total: 73 102 tCO2e From: July 2011 to: Dec 2020 (i.e. 9,5 years)
Total by 2012: 11 542 tCO2e Annual average: 7 695 tCO2e/year
AMS-III.H. Methane recovery in wastewater treatment (version 13 or latest)
+ AMS-I.D. Grid connected renewable electricity generation (version 14 or latest)
Not feasible due to high investment.
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Deliverable D12

4. Conclusions
i) Biodiesel from fish-waste

If the biodiesel would be sold in the market and used to replace petrodiesel, the emission
reductions would be in the order of 13 850 t CO2e/year, if an emission factor of 2.92 t CO2/t for
petrodiesel is used. This would mean a CER income of roughly 138 500 /year, and the total
annual income (including the sold biodiesel) would accumulate to 4.1 4.4 million .
With an investment of around 400.000,- , this means this sort of project is not additional, and
therefore not eligible for CDM funding.

ii) Biogas from glycerol.

This type of project, biogas from wastewater sludge to electricity, is not common practice in
Vietnam, and it would be a considerably high investment generating a relatively small income.
Asian technology could be substantially less expensive, and thus the availability and costs of such
technology should be investigated in the further stages of project development, such as in a
feasibility study. If the costs are assumed to be 5.5 M (Finnish technology), and the annual
electricity costs savings and CER income from the biogas plant account to 161 170 , the payback
period would be roughly 34 years (no discount factor applied). Without the CER income the
payback period is notably longer, about 65 years.
However, for instance The Chiang Mai based ERDI institute (Thailand) has designed numerous
similar biogas plants in Thailand, reducing the costs by a factor 5-6. This is due to the design
being especially made for tropical counties (involving less insulation), making the project more
feasible.

5. References
[1] Intergovernmental Panel on Climate Change (IPCC): http://www.ipcc.ch
[2] United Nations Framework Convention for Climate Change (UNFCCC): http://unfccc.int
[3] K.Capoor and P.Ambrosi. State and trends of the carbon market 2009. World
Bank,Washington DC, 2009.
[4] BlueNext: http://www.bluenext.eu/
[5] European Climate Exchange (ECX): http://www.ecx.eu/
[6] Recherche Mission Climat Caisse des Dpts et Consignations :
http://www.caissedesdepots.fr/activites/lutter-contre-le-changement-climatique/recherche.html.
[7] cdm.unfccc.int Project Cycle Search Methodologies
[8] L.Schneider, Assessing the additionality of CDM projects: practical experiences and lessons
learned, Climate Policy, 9(2009), 242-254.

29